Persistent inflation pressures from the Middle East conflict have driven the ECB to hike its deposit facility rate to 2.50% in September 2026, following a June increase, with staff projections showing headline inflation averaging 3.0% for the year and risks skewed to the upside. Market-implied odds reflect trader consensus that further tightening, potentially including a December move, will keep policy rates elevated through year-end rather than permitting any easing. Recent data-dependent communications and upward revisions to 2027–2028 inflation forecasts reinforce this stance amid resilient euro-area growth. Tail risks include a rapid de-escalation in energy prices or sharper-than-expected labor market softening that could reopen cut discussions before December, though current trajectories make such shifts unlikely.